Alistair Allison, Partner, Tuffin Ferraby Taylor (TFT), @alistairallison:
The importance of independence is generally acknowledged but often misunderstood, or merely paid lip service, particularly when markets are good.
The ability for consultants to take a step back and provide clear and unaffected advice enables clients and deal makers to have an impartial viewpoint on aspects that are clearly important – otherwise why would our clients seek advice….?
We (generally) work in a professional and ethical industry and so the term ‘independent’ or ‘impartial’ is often confused with ‘not fraudulent’ or ‘not honest’. In reality, the impact of not being independent when providing advice on a deal or pending acquisition is often far less sinister. However, it is difficult to convince the market that if one side of the business will benefit hugely from a deal, the technical advisory side will not be under some pressure (real or implied) to soften the blow of potential issues/risks to avoid souring the deal. This is the reality if Technical Due Diligence is carried out ‘in-house’ by the investment agent’s building surveyor.
An independent advisor can stand back and provide open and robust advice on issues, risks and opportunities without the fear of lost revenue or internal politics.
Chinese Walls are often ‘built’ to manage potential conflicts, and while these can separate obvious cross-flows of sensitive information, it is very difficult to avoid pressures of the ‘bigger picture’. In multi-disciplinary practices, you’d be forgiven for asking whether you want to be the guy highlighting issues if that could impact the deal and other, possibly more lucrative income streams flowing from it.
At Tuffin Ferraby Taylor (TFT), we pride ourselves on our independence and therefore the ability to provide open and accurate advice that need not be ‘dressed up’ to avoid affecting other interests.